El Toro Corporation declared a common stock distribution to all shareholders of record on June 30, 20x3. Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own. Raoul owns 330 shares of El Toro stock with a tax basis of $73 per share. The fair market value of the El Toro stock was $112 per share on June 30, 2023. What are the tax consequences of the stock distribution to Raoul? Multiple Choice ___ $0 dividend income and a tax basis in the new stock of $112 per share. ___ $0 dividend income and a tax basis in the new stock of $72 per share. ___ $0 dividend income and a tax basis in the new stock of $48 per share. ___ $18,480 dividend and a tax basis in the new stock of $112 per share.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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El Toro Corporation declared a common stock distribution to all shareholders of record on June 30, 20x3. Shareholders will receive 1 share of El Toro stock for each 2 shares of stock they already own. Raoul owns 330 shares of El Toro stock with a tax basis of $73 per share. The fair market value of the El Toro stock was $112 per share on June 30, 2023. What are the tax consequences of the stock distribution to Raoul?

Multiple Choice

___ $0 dividend income and a tax basis in the new stock of $112 per share.

___ $0 dividend income and a tax basis in the new stock of $72 per share.

___ $0 dividend income and a tax basis in the new stock of $48 per share.

___ $18,480 dividend and a tax basis in the new stock of $112 per share.

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